1. © Copyright Ellen Bessner

2. 2 PART I: Employment Law Recent Cases Preparing Investment Plans – Dos and Don’ts PART II: Look Communications – When a company sues its former directors and officers, court approval is required under the CBCA for advance payment of legal fees

3. 1. EMPLOYMENT LAW RECENT CASES Saturley v. CIBC World Markets (2013) NSSC 300  20 + years IA  Much of the case described investment strategy  Strategy coordinated selling of put and call options on the same security  Third party miscalculated margin and failed to report accurately – when Saturley realized this – reported to CIBC and margin calls made on every client © Copyright Ellen Bessner 3

4. SATURLEY (cont’d)  Saturley called clients encouraging them to issue claim against CIBC  CIBC investigated matter and concerns re: discretionary trading because of need to make huge volumes of calls over short period – impossible  Judge accepted the evidence of CIBC re: impossible to make calls and shifted onus onto Saturley to prove he called © Copyright Ellen Bessner 4

5. SATURLEY (cont’d)  Saturley did not call as witness his assistant or others re: evidence how he was able to get instructions – negative inference drawn  Helpful to CIBC: both 2004 and 2007 suspicious of Saturley engaging in discretionary trading and warned him (2004 penalty and 2007 discretionary trading is serious offence) WAS WARNED! © Copyright Ellen Bessner 5

6. SATURLEY (cont’d)  Unusual to find cause – judge concerned about investing public – interesting decision for employers in the investment industry © Copyright Ellen Bessner 6

7. OGDEN v. CIBC (2014) BCSC 285  Test: did employee (FA) conduct strike to the heart of the employment relationship?  Decision: FA’s conduct fell far below that standard and termination was so high handed justified aggravated damages © Copyright Ellen Bessner 7

8. OGDEN v. CIBC (2014) BCSC 285 (cont’d)  Comingled client funds  Two wire transfers from China with her own funds  No personal gain to Ogden  CIBC relied on “conflict of interest” policy – NOT specific to infraction – NO EXPRESS PROHIBITION – no training on conflicts © Copyright Ellen Bessner 8

9. OGDEN v. CIBC (2014) BCSC 285 (cont’d)  CIBC relied on cumulative cause but must include a warning before final incident that provides opportunity for improvement  Key aspect – whether employee’s conduct was honest mistake, error in judgment or lack of training © Copyright Ellen Bessner 9

10. OGDEN v. CIBC (2014) BCSC 285 (cont’d)  “Proportionality” – termination is the “capital punishment” of employment law  CIBC should have issued warning only – cause NOT warranted © Copyright Ellen Bessner 10

11. 2. PLANNING DOS & DON’TS © Copyright Ellen Bessner 11

12. GIESBRECHT v. CANADA LIFE [2013] M.J. NO. 160 (MAN. C.A.)  In their 50’s needed $35k/annum to retire until 90  Insurance/MF advisors – 2 page letter and illustrations  “Some suggestions regarding retirement” © Copyright Ellen Bessner 12

13. © Copyright Ellen Bessner 13 Investment growth (added from several sources) Income continuation Sale of Calgary home Rental income at reasonable rate Gather together savings to invest in plan “Illustrations” and “Assumptions”

14. GIESBRECHT (cont’d)  Gs put plan in drawer  Several years later panic – run out of money – got jobs paying less and sued advisors  Gs won at trial/overturned on appeal  Choice of language on Plan key “assumptions” NOT promises/ opinions – cannot succeed in claim for negligent misrepresentation © Copyright Ellen Bessner 14

15. PART II: Cytrynbaum et al v. Look Communications – When a company sues its former directors and officers, court approval is required under the CBCA for advance payment of legal fees under indemnity by laws or agreements © Copyright Ellen Bessner 15

16. CYTRYNBAUM V. LOOK COMMUNICATIONS (cont’d)  This case deals with claims by former directors and officers of Look Communications for advance funding of their legal costs to defend an action brought against them by Look © Copyright Ellen Bessner 16

17. CYTRYNBAUM V. LOOK COMMUNICATIONS (cont’d)  The appellants asserted the right to advance funding based on Look’s by- laws and various indemnification agreements  The claims for advance funding were fought by Look under s. 124(4) of the CBCA, on the grounds that advance funding should be refused if the appellants did not act honestly and in good faith © Copyright Ellen Bessner 17

18. CYTRYNBAUM V. LOOK COMMUNICATIONS (cont’d)  The application judge and the Court of Appeal agreed with Look and found that as Look had established a strong prima facie case of bad faith, advance funding should be refused © Copyright Ellen Bessner 18

19. CYTRYNBAUM V. LOOK COMMUNICATIONS (cont’d)  The legal costs of the application to the parties were in the hundreds of thousands of dollars, all spent to determine if advance payment of legal fees could be made.  Look filed over 4000 documents in support of its position and several affidavits. There were multiple cross examinations  The appellants argued that to allow Look to raise the issue of bad faith at this preliminary stage of the proceedings would effectively eviscerate the right to advance funding © Copyright Ellen Bessner 19

20. CYTRYNBAUM V. LOOK COMMUNICATIONS (cont’d) Bad facts make bad law? Will prospective directors run for the hills? IMPLICATIONS © Copyright Ellen Bessner 20

21. Ellen Bessner, Partner ebessner@babinbessnerspry.com ebessner@babinbessnerspry.com Tel: 647-725-2606 Ed Babin, Partner ebabin@babinbessnerspry.com Tel: 416-637-3294 www.babinbessnerspry.com ebabin@babinbessnerspry.com www.babinbessnerspry.com © Copyright Ellen Bessner 21